BAE Systems rejected calls for an investigation into allegations that the
company’s former chairman acquired two luxury properties from offshore
companies linked to a Saudi defence deal.

The British defence giant said claims that Sir Richard Evans gained ownership of two London penthouses, now jointly worth £6m, dated back 25 years and had already been part of a Serious Fraud Office investigation into the £43bn al-Yamamah arms deal which was halted in 2006 by the then Prime Minister Tony Blair.

The Saudis had threatened to cut diplomatic ties with Britain if the investigation into the deal to supply Tornado and Hawk jets was not dropped.

Sir Richard led the company for 14 years, first as chief executive and then as chairman from 1998. He stepped down as chairman of BAE in 2004 but remained on its advisory board until 2010.

A spokeswoman for BAE said the allegations, which emerged in The Sunday Times, had been “widely aired and fully investigated in the past” as part of the original SFO investigation.

“The fact is the company has never been charged with or convicted of any offence involving corruption or the making of illegal payments in relation to these or any other matters,” the spokeswoman added.

“Three years ago we announced a global settlement with the US Department of Justice and the UK Serious Fraud Office and over the last decade, we have systematically enhanced our compliance policies and processes.”

BAE agreed to pay almost £300m in the US and UK to settle long-running corruption claims. The lion’s share of the sum was paid in the US.

Lord Macdonald, director of public prosecutions when the SFO inquiry was stopped in 2006, yesterday claimed the fresh allegations justified a new investigation.

“A failure to conduct a full investigation into this alarming material would gravely damage the UK’s reputation as a country which respects the rule of law,” he said.

“It is unthinkable that the police and prosecuting authorities should ignore it. They must act.”

It was reported that the SFO’s files show how a network of six law firms in four countries were used to hide how Sir Richard, who could not be reached for comment, had acquired the two luxury flats in Mayfair.

The SFO however echoed BAE’s view that the claims were part of the original investigation which was now in the past.

“The SFO discontinued its investigation into allegations of improper conduct in connection with the al-Yamamah contract in 2006 on the public interest grounds that there was a risk to national security,” a spokesman said.

A spokeswoman for the Ministry of Defence said it was a matter for BAE and declined to comment.